Jobs bloodbath at Brit, Danish wind turbine factories
Offshore wind offshored
International wind-turbine maker Vestas has announced that it will lay off 1900 employees including 600 in the UK. The news was well received by markets, with Vestas raising £700m in a Danish share issue the next day and announcing investments in Chinese plants.
Writing in the company magazine, Vestas president and CEO Ditlev Engel said:
A number of people have said we should have adjusted and trimmed the company already...
In no way did we conceal that 2009 was going to be a challenging year for Vestas... [there will be] an unavoidable negative impact on our production business units especially in Denmark, just as the blades plant on Isle of Wight, UK is affected in high scale.
No one should doubt that I am really sorry... It hurts, but we must always do what is best for Vestas...
Engel, who was brought in to rescue an ailing Vestas in 2005, spent his entire previous biz career as an exec with paint globocorp Hempel. He has ridden soaring oil prices in recent years to a stellar stockmarket performance.
The job cuts will be a blow to the British government, which has recently announced plans to boost investment in UK offshore wind by tinkering with the Renewables Obligation Scheme. This would have the effect of raising electricity prices, and directing the extra revenue to offshore British windfarm projects.
Treasury estimates suggest that as much as £525m of new private investment might result: and the government is known to hope for many new British "green-collar" jobs to appear on the back of this. It's felt by the government that Blighty might surge to prosperity manufacturing green tech such as wind turbines, and selling them around the world for big payola.
Unfortunately Mr Engel makes it very clear that it's only worth making wind turbines using well-paid, highly regulated British workers for sale in the British market. (The same seems to be true of Danes.)
To this comes also lack of will and desire to put up wind turbines in some of the North European markets... the challenge we are facing us to convert as many away games as we possibly can into future home games... as we now realise there is not an adequate convergence between the countries in which we have plants and the markets that are expected to purchase our products - well, that leaves us with no other choice than to adjust the company to match the conditions that are actually being offered us by these markets.
In other words it's a hell of a lot cheaper to make wind turbines in India or China, just like most manufactured goods (no surprise, wind turbines are quite simple equipment). So forget about a glorious future of British windmill makers winning orders from around the globe. The only place British factories can sell turbines is in Britain, it seems, and even this will require massive further subsidy.
Engel also offers a hint as to where the six billion Danish crowns from Copenhagen money men impressed by this round of layoffs might go.
The US and China are showing strong growth prospects which is why our huge investments in these countries continue steadily... Our growth scenario is intact.
Everything's big in America, even Bush-era renewables subsidies. After all, treehugging California on its own is the tenth biggest economy in the world. But there's no such incentive in China - Chinese subsidies, announced (funnily enough!) in Q3 last year are strictly for majority-Chinese-owned businesses, intended to kick well-paid workforces like that of the old, failing, European Vestas out of the global market.
Vestas is going to China for cheap labour like everyone else, not to sell turbines there.
You can see why the British unions seem more impressed by government plans to generate jobs in nuclear power, an industry which is definitely not going to China or India in a hurry. ®